Decline in Branch Banking, or an Evolution?

treesroadunsplashSeveral news outlets have picked up on recent data from revealing that 30 percent of Americans haven’t visited a branch in at least six months, among them, which called it the one stat big bank CEOs are freaking out about.

Half of Americans visited a branch at least within the last month, 64 percent within the last six months and 73 percent in the last year. A request to for past data on branch visits was not answered. expects branch visits to continue to decline. Many banks have been closing branches (a net closure of almost 1,500 branches in 2013, according to SNL Financial), so I suspect many CEOs and boards, especially of the largest institutions, are prepared for a decline in branch banking. But the decline in branch banking doesn’t mean that all branches will close. Branches may get smaller: Wells Fargo unveiled mini-branches about a year ago. Technology plays a big role, as banks seek to streamline tasks and expand their reach while simultaneously reducing their physical presence.  Automation within the branch, through technology like video tellers or teller capture, may gain more traction. And in an industry battling efficiency ratios and margin compression, this change in branch banking could be a good thing.

Technology, particularly the growth in popularity of mobile and online banking, has also changed WHY we go to the branch. Not to allow anecdotes to get in the way of good data, but the last time I went into a branch was for a home equity loan. More often, consumers visit a branch because they want information and financial guidance, and though some would argue that you can do this all online, there’s still a number of consumers that still want to talk to their banker face-to-face.

These consumers want a trusted adviser, and this is the shift in branch staffing that runs parallel to the technology shift allowing banks to make transactions more efficient. Last summer, Bank Director’s Bank Board & Executive Survey found that 40 percent of banks planned to reduce staff. Based on what I’m hearing, banks are shifting from transactional-based staffing, i.e. tellers, to more “all-around” employees that can cross-sell products that take care of all the customers’ needs. My home equity guy? He’s also getting his securities license, and while we were signing our paperwork, he updated our savings account to one that better fits our needs (and accrues more interest).


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